Contributes Rs 3 billion to Treasury:
Loss–making ventures now make profits – Minister Dayasritha Tissera
By Ranil Wijayapala
“Empowering the Sri Lankan economy by managing government resources
through efficient enterprise management strategies” is the vision of the
Ministry of the State Resources and Enterprise Development Ministry
which was stabilising in 2010 under the broad vision of the ‘Mahinda
Chinthana’ to make Sri Lanka the ‘Wonder of Asia’. Dayasritha Tissera as
the Minister entrusted with this task of turning loss-making and
non-functioning entities into thriving businesses along with his team is
making a tireless effort to make these once-reputed state institutions
into vibrant state business ventures.
He has come a long way by contributing Rs.2.9 billion dividends to
the Treasury during its operations, relieving the Treasury of a big
burden. Yet, it has a long way to move forward on its path towards
success facing many challenges and obstacles to achieve its target of
making all institutions under its purview profit-making ventures. Here
is how State Resources and Enterprise Development Minister, Dayasritha
Tissera told the Sunday Observer of his march towards success along with
his team.
Q: The Ministry of State Resources and Enterprise Development
was formed to restructure and re-energise some of the state institutions
that were defunct and running at a loss. It had 24 institutions under it
purview. What are the changes that have taken place in the past few
years?
A: We initially had 24 institutions under our Ministry. But
with the expansion of the Cabinet some of the institutions which were
under our Ministry were given to other Ministries. Laksala which could
earn a profit of Rs.40 to 50 million has been given to the Botanical
Gardens and Public Recreations Ministry. Hingurana and Kantale sugar
factories which were also under our Ministry have been given to the
newly-constituted Sugar Industries Ministry. Apart from this, 15 other
state institutions are functioning under our Ministry at present.
Q: What is the present state of these institutions under the
purview of your Ministry?
A: Out of these 15 institutions, the Lanka Mineral Sands
Company Ltd has been able to remit Rs.2 billion as dividends to the
Treasury last year. Lanka Phosphate Company Ltd has also remitted Rs.60
million. BCC Lanka Ltd which was running at a loss earlier has also
earned Rs.7.5 million profit last year. BCC has a few loans to be
settled with the Bank of Ceylon and we are in the process of repaying
the loans and running the institution in an efficient manner.
At present we have taken an initiative to shift the institution to
the Wathupitivala area from the present location as we have come to an
agreement to release the land for expansion of the court complex in
Colombo.
The Government has pledged that the estimated value of the land will
be remitted to the BCC Lanka Company Ltd. Paranthan Chemicals Company
Ltd is now functioning in the Kalutara area to import and distribute
chlorine. We are expecting to reestablish Paranthan Chemicals Company in
Paranthan itself in due course. Paranthan Chemicals also is now running
as a profit-making institution.
Q: Meanwhile, there are several other institutions which are
running at a loss at present. What are your plans to restructure them?
A: We expect to turn Lanka Salusala, Sri Lanka Cement
Corporation and the Lanka Cement Company Ltd. which were facing some
difficulties during the past few years to profit-making bodies after
making necessary changes within the institutions.
Therefore, we have changed the Director Board of the Sri Lanka Cement
Corporation and Lanka Cement Company Ltd to make necessary changes in
these institutions.
We hope that these institutions will pass the break even point by
April this year. We are expecting to restructure Lanka Salusala Limited
also within this year to turn it into a profit-making venture.
At the same time, we are also expecting to implement a
target-oriented program to settle the problems in plantation sector
institutions - Elkaduwa Plantation Company, State Plantation Corporation
and Janatha Estates Development Board and to make them profit-making
ventures. We are trying to settle the disputes relating to the non
payment of EPF, ETF and gratuity to employees during the past 10 to 15
years by selling trees with economic value within these plantations. We
are then trying at least to find a solution for the Rs.3000 million
problem relating to the EPF, ETF and gratuity to a certain level.
Q: Do you have any other plans to make them profit-making
bodies making use of the assets in these institutions?
A: We have some plans to make necessary changes in the
plantation sector by appointing efficient management to maintain these
plantations which are scattered all over the country. Apart from that we
are planning to have different programs to make use of these plantations
in a more efficient manner. We are now having discussions with the
Tourism Ministry to make use of ancient bungalows in important locations
to promote tourism.
We have identified 12 locations for improvement. Apart from that we
have embarked on a business diversification program in the plantation
sector institutions by starting a mineral water project. We are
expecting to expand it further and we are trying our best to run them as
profit-making institutions by having a three-year plan.
Q: Your Ministry carried out restructuring programs for some
institutions like the Embilipitiya Paper factory by giving them to
investors. But it has faced some problems at present. How are you going
to settle this issue?
A: We followed the correct procedure when we selected the
investor for the Embilipitiya Paper factory. We called Expressions of
Interest and selected the Perth International Australian Company.
They paid us Rs. 400 million as an initial payment and it helped us
to settle the EPF, ETF and gratuity due to employees and to pay the
electricity bill from that payment. Another Rs.200 million was due to
the Government. But because of a dispute between the local partner and
foreign investor they did not pay us the balance Rs.200 million.
Now they are not in a position to run the institution. They have
obtained a loan from a local bank to begin operations. We are now having
discussions with the investor, the bank and other investors to settle
the issue which has inconvenienced the Government to a certain extent.
Now we believe that there is room for us to settle the issue without
creating a problem.
Q: The paper mill in Valachchenai also underwent a
restructuring process. What is the present situation of the Valachchenai
paper mill?
A: When we took over the Valachchenai paper mill it was
producing only 35 tonnes. It has now increased to 300 metric tonnes. By
mid this year we expect to exceed production capacity by 500 metric
tonnes per month. With that production capacity the paper mill will be
able to earn the income required to the pay salaries EPF, ETF and
gratuity to employees, with its income when it produces 400 metric
tonnes per month.
By the end of this year we are expecting to increase capacity to
1,500 metric tonnes. After we reach 500 metric tonnes we will be able to
export. To increase capacity of the paper mill we need to have more
scrap paper as raw material. Sri Lanka is exporting 900 metric tonnes of
scrap paper per month and I had discussions with these exporters to get
a part of that scrap paper
to our factory. If we cannot settle the issue with mutual
understanding we will have to seek a legal mechanism to get a quota of
the scrap paper that is exported. I have already submitted a Cabinet
paper to get the scrap paper collected at state institutions free to the
Valachchenai paper mill. Another Cabinet paper has been submitted to
make it compulsory for government institutions to purchase file covers
and paper from our factory. We are expecting to modernize technology and
increase the production capacity further.
Q: Many of the government factories such as the Kankesanthurai
cement factory were institutions that helped the people. But they had to
be closed due to terrorism. Does the Ministry have the capacity to
re-establish these factories to their former glory or do you have any
other program under your Ministry?
A: There are some logistical problems with regard to starting
the Kankesanthurai cement factory as it was not functioning for a long
period. The area has yet to be cleared of landmines. We have decided to
start a cement packaging factory first. To import cement in bulk form
and bag cement at the factory. Only at the second and third stage that
we are expecting to re-establish the cement factory. More than 90
percent of the machinery cannot be used at present. We have to commence
as a new factory. Limestone covered land is also there. We have a plan
to start a cement bagging factory in the Hambantota area as well.
Q: Do you have any program to provide cement at concessionary
rates through the Sri Lanka Cement Corporation and Lanka Cement Company
Ltd.?
A: We are supplying cement to the local market at the lowest
rate. When there are attempts to increase the cement price by private
sector importers by providing cement at the lowest possible price
keeping a small margin of profit for us, we are controlling the price of
cement in the market. At present we supply cement for less than Rs.800.
But we will have to increase the price but this price will be the lowest
price in the market.
Q: When restructuring government institutions investors are
exploiting assets of these institutions and abandoning them. What kind
of program do you have to avoid such situations in the restructuring
process of government institutions?
A: When we restructured the Embilipitiya paper factory we gave
them only the machinery but not the land. So we had a problem there. In
the future we are going to rectify this situation.
The problematic situation that arose there was not due to our fault
but due to a conflict between the local agent and the foreign investor.
Therefore, we have taken the land back to the Government after having
discussions with the bank.
Q: Have you identified institutions under your Ministry that
cannot be brought back to operational level and what are your plans for
these institutions?
A: We have identified some institutions which were only name
boards. In some institutions, we had only the land. So we have listed
them as non functional entities under our Ministry. Institutions like
the Kahagolla Engineering Service Company Ltd, Werahera Engineering
Services Company Ltd, Lanka Sack Makers Ltd. and the Department of Small
Industries are such non functional entitites. Some of the land and
buildings under these institutions have been vested with other
Ministries according to their requirements. Now we have only 15
institutions under our Ministry with the guidance given by President
Mahinda Rajapaksa we will be able to make visible changes in these
institutions in the next two to three years. For some institutions we
are canvassing partnerships with investors to have necessary technology
and operate them as joint ventures.
Q: Under the intense competition in the open economy there is
a perception that Government institutions cannot compete with private
sector institutions. As a Ministry handling many of these government
enterprises do you agree with this notion?
A: As a country we have accepted the open economic policy a
few decades back. When we talk about government institutions we have
given them an unnecessary burden. As for Laksala, it had a good
reputation as a government institution, now it can earn profits after
making necessary changes in these institutions. Many of the institutions
under our Ministry depended on funds from the Treasury. We changed that
policy after introducing drastic changes in these institutions. Now we
don’t take money from the Treasury for the industrial sector.
The only problem we have is with regard to the plantation sector
companies.
If we get the support of environmental organisations and political
authorities we can make them also profitable ventures within the next
few years. We have plans to do that and if we get the required support
and honest officials in these institutions we will be able to achieve
targets.
Q: You said that Lanka Mineral Sands Company Ltd is generating
huge profits. What are the programs you have to expand it further?
A: We have imported required machinery to make use of another
mineral sand deposit located across the Kokilai lagoon. We have acquired
a 50 acre-land to fix those machines and make use of that mineral sand
deposits.
Accordingly we have set a target of achieving Rs.4 billion profit
this year. We think we can achieve that target when we compare with
competitive prices in the world market.
We are working with a business mind when issuing our mineral sand
stock to the market. We are keeping our stocks in our stores. When
silicon, ilmonite and high titanium stocks are freely available in the
world market and we will release the stock when there is a shortage in
the market during the winter season in other countries. We have a good
team and it is a great strength to us.
Q: At the initial stages your Ministry had to take funds from
the Treasury. What is the situation now?
A: Yes we had to take Treasury funds to run many of our
institutions at the initial stages. But with the changes we made in
these institutions we are in a position to contribute funds to the
Treasury.
Last year we contributed nearly Rs.3 billion to the Treasury from the
earnings of our profit making institutions. We are happy about this
situation and we are expecting to increase that limit upto Rs. 5 billion
this year. |